Simple Versus Complex Organizations

          The basic nature of a business firm affects the complexity of its internal organization. A fairly large factory making only a few products may need only one chief executive and several managers to head its manufacturing, marketing, and financial divisions. The firm can rely on supervisors to direct its factory operations. Similarly a large drugstore needs only one manager and some well-trained department heads to supervise the employees within their departments. But as a firm becomes larger, it usually also becomes more complex and more difficult to manage. It is the internal organization that must adjust to meet these challenges.
          Many things may necessitate special arrangements in the internal organization of a business firm. Sometimes the need is basic. Such as dividing areas of research within a laboratory to meet safety standards, or making a change to settle conflicts among employees. Usually, though, a firm makes adjustments to resolve one of the following complications of growth:

•   Expanded markets
•   A need to decentralize the firm
•   Multiplant manufacturing
•   Special projects
•   A need for specialists in certain areas
•   Internal operations
•   Technical production processes
•   A need to delegate authority and save executive' time
•   Special jobs, titles, or divisions of the company's operations